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Riyadh, Saudi Arabia Attorneys in related practice areas.
In Saudi Arabia, the Bankruptcy Law came into effect in 2018, and is a comprehensive framework that deals with insolvency and bankruptcy. This system aims at enhancing the competitiveness of the environment for businesses, encouraging financial stability and sustaining the economic growth in Riyadh and across Saudi Arabia. It provides distressed entities with legislative options to avoid bankruptcy where possible and restructure their debt, while protecting the rights of all stakeholders including debtors and creditors.
Professional legal advice can be necessary in numerous situations. If you are facing insolvency or financial difficulty, a lawyer can guide you through the process, helping you understand your rights and responsibilities as well as potential options for restructuring or debt settlement. Should bankruptcy become unavoidable, a lawyer can help navigate the complex proceedings, protect your interests, and work towards the best possible outcome given the circumstances. Business owners may also seek legal advice before insolvency, to understand potential implications and proactively prepare for any future complications.
Saudi Arabia’s Bankruptcy Law identifies three main procedures: Preventive Settlement, Financial Restructuring and Bankruptcy Liquidation. Preventive Settlement allows financially distressed entities to reach a settlement with creditors while continuing their operations. Financial Restructuring provides a framework for restructuring the debtor's business under court supervision. Bankruptcy Liquidation involves liquidation of the debtor's assets to pay off creditors. The priority of claims varies, with certain debts such as employee wages and retirement obligations taking precedence over unsecured claims.
Yes, by opting for preventive settlement or financial restructuring, debtors may avoid liquidation. Although these procedures require agreement from a majority of creditors, they may allow the debtor's business to continue operations and gradually settle debts.
The Bankruptcy Law applies to foreign persons or entities engaged in commercial activities inside Saudi Arabia and, under certain circumstances, to those with assets or revenues in the country.
The law defines which assets may be liquidated to settle debts. Generally, assets necessary for the basic livelihood of the debtor and their family are exempted from liquidation.
Creditors can present their claims and participate in the respective proceedings. Certain claims, including secured claims and post-bankruptcy debts, have priority over other claims.
Under the law, most decisions by the Bankruptcy Committee or the court can be appealed. Creditors and debtors alike have this right under respective situations as outlined in the law.
The Ministry of Commerce is a valuable resource for understanding the bankruptcy and insolvency regulations in Riyadh and across Saudi Arabia. The Saudi Arabian General Investment Authority (SAGIA) can also offer insights and assistance, especially for foreign businesses operating in Riyadh.
If you find yourself in need of legal help concerning debt or bankruptcy, consider seeking out professional legal advice. There are many law firms in Riyadh specializing in bankruptcy law who can provide guidance tailored to your specific circumstances. Understanding your rights and potentials routes of legal procedures can be instrumental in protecting your interests and reaching a satisfactory resolution.
